Move allows U.S. banks to take direct payments for research without it being considered investment advice

WASHINGTON—U.S. regulators on Thursday allowed Wall Street banks to sidestep the toughest consequences of a European Union law that could have imposed stricter rules and responsibilities on their practice of issuing analyst research on stocks and other assets.

Under the relief issued by the Securities and Exchange Commission, banks will be allowed to take direct payments for research without it being considered investment advice, a designation that could have squeezed other lucrative services they provide to money managers....